AmerLisa

Love it, love it, love it. Thanks everyone for all your helpful information. As usual this is the best place to ask questions. Karma to all, either now or as soon as possible.

strim

I have an early closure fee for my HELOC and am not sure if I can deduct -- what does it mean by "if it is not for a particular service from the mortgage company"??? My fee is just listed as a cost with no info on what it was for.

dbj1000

The key is whether the charge is effectively an interest charge. If the early redemption/closure fee is not a service charge or administration fee then it can most likely be treated as mortgage interest, and deducted.

For example, our mortgage in the UK had a low fixed rate for the first two years, but in return we were tied to the mortgage company for 5 years. When we sold the house only 2.5 years into the mortgage term, they charged us a huge early redemption fee. Clearly that was in lieu of interest that they would have charged to cover the initial low rate period, so it was clearly deductible from our 2004 US taxes.

However, I'm not a CPA and I know bugger-all about HELOC loans, so you may want to ask the IRS (they're not bad to talk to on the phone) or a CPA.

AmerLisa

Sorry to bump up this thread. I've tried to give karma to those that helped and I still can't.... But, we just got our big fat refund deposit - electronically into our bank - yesterday and had no problems at all. Thanks everyone and I will still karma when I'm able to.